In this country radio call letters are assigned by the Federal Communications Commission. There are corresponding government agencies in other countries that assign call letters in those countries.
The "W" and "K" designations for U.S. radio stations go back to the Federal Radio Act of 1934. By international treaty, other countries and areas have their own distinctive designations - "C" in Canada, "X" in Mexico, etc.
"W" was the designation for stations East of the Mississippi and "K" for stations West. Before that rule was firmly established, some stations East took "K" calls (like KDKA, Pittsburgh) and others West took "W" calls (like WMT in Cedar Rapids, IA and WHO in Des Moines, IA).
In the early days stations could also take three-letter calls, but for several decades new stations have had to take four-letter ones. If a three-letter station goes "dark," those calls are retired and cannot be reused.
Here are some web sites that may give more info.
http://nelson.oldradio.com/origins.html http://earlyradiohistory.us/recap.htm
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